Change of Opinion: When Section 148 Reassessment Fails

Last reviewed: 25 September 2026. A steady stream of reassessment notices issued under Section 148 and Section 148A continues to be challenged, and set aside, on the ground that the Assessing Officer is doing nothing more than taking a second, different view of facts and material that were already on record during the original assessment. That “change of opinion” bar comes from the Supreme Court’s decision in CIT v. Kelvinator of India Ltd (2010) 320 ITR 561 (SC), and it remains one of the sharpest and most cost-effective defences available to a taxpayer — provided it is raised at the right stage, ideally in the reply to the Section 148A(1) show-cause notice itself, before a formal reassessment order is even passed. One caveat has to be stated at the outset, because it decides how much a client should sensibly spend on the point: Kelvinator construed the expression “reason to believe”, which no longer appears in Section 147 or Section 148. Whether the bar survives in the same form under the post-2021 “information which suggests” regime has not been authoritatively settled.

Which section numbers apply to your notice. Section 148A was substituted by the Finance (No. 2) Act 2024 with effect from 1 September 2024. For a notice issued on or after that date, the show-cause notice comes under Section 148A(1), your reply goes in under Section 148A(2), and the Assessing Officer passes an order under Section 148A(3) with the prior approval of the specified authority under Section 151. The older clause references — Section 148A(b) for the show-cause notice and Section 148A(d) for the order — apply only to notices issued between 1 April 2021 and 31 August 2024, many of which are still in appeal. For tax years beginning on or after 1 April 2026 the same machinery sits in the Income-tax Act, 2025: Section 279 (old 147), Section 280 (old 148), Section 281(1), (2) and (3) (old 148A(1), (2) and (3)), Section 282 (old 149) and Section 284 (old 151). A scrutiny assessment is made under Section 270(10) (old 143(3)) and a return is processed under Section 270(1) (old 143(1)). Earlier years continue to be governed by the 1961 Act under Section 536(2)(c) of the new Act, whatever the date of the notice.

The change-of-opinion bar: what it actually means

Reopening a completed assessment used to require the AO to have “reason to believe” that income had escaped assessment. Under the regime introduced by the Finance Act 2021 the statutory trigger is different: Section 148 permits a notice only where the AO has “information which suggests that income chargeable to tax has escaped assessment”. Where the material forming the basis of that view was already before the AO during the original assessment — on the face of the return, in the tax audit report, or specifically called for and examined during scrutiny — and the AO simply reads that same material differently later, courts have treated this as a change of opinion rather than a valid ground for reassessment. The foundation is CIT v. Kelvinator of India Ltd (2010) 320 ITR 561 (SC), where the Supreme Court held that reassessment requires “tangible material” having a live link with the formation of the belief, and that the power to reassess is not a power to review a concluded assessment.

Does the bar survive the new regime? The honest answer

Explanation 1 to Section 148 deems a range of inputs to be “information” — flags thrown up by the Board’s risk management strategy, objections raised by the Comptroller and Auditor General, and information received under specified agreements and schemes. The Department’s argument follows from that: once an input falls within Explanation 1 it is “information” by statutory fiat, and a safeguard that the courts read into the words “reason to believe” cannot simply be carried across to language Parliament deliberately replaced. High Courts have continued to apply the change-of-opinion principle under the new regime, on the reasoning that reassessment has never been a power of review and that the substitution of language does not confer one. But no decision has squarely settled the question, and the Supreme Court is presently seized of a related issue on Section 148A in PCCIT v. Vasuki Global Industries Ltd, SLP (C) Diary No. 12375/2026, where notice was issued on 8 April 2026 on whether the Assessing Officer must verify information before acting on it under Section 148A. Separately, the Supreme Court’s decision in Union of India v. Rajeev Bansal (3 October 2024) settled how the TOLA extensions and the post-2021 time limits apply to reopening notices, so check limitation under that decision first; a time-barred notice fails without any need to argue change of opinion.

What that means for a client deciding whether to litigate. Plead change of opinion, plead it early, and plead it specifically — it costs little at the Section 148A(1) stage and it has repeatedly worked. But plead it alongside a full defence on the merits of the claim, never instead of one. A matter staked entirely on change of opinion carries the risk that the point is decided against taxpayers while your appeal is pending, leaving you with nothing on the record about why the addition itself is wrong.

The threshold question: was an opinion ever formed?

Change of opinion presupposes that an opinion was formed. That happens where a scrutiny assessment was completed under Section 143(3) — Kelvinator proceeds on the footing that the AO is deemed to have applied his mind to the material before him in passing that order. It does not happen where the return was merely processed under Section 143(1). An intimation under Section 143(1) is not an assessment, no opinion is formed, and the change-of-opinion bar does not arise at all: ACIT v. Rajesh Jhaveri Stock Brokers (P) Ltd (2007) 291 ITR 500 (SC). For the great majority of MSME and closely held company returns, which are processed and never scrutinised, this is the very first thing to check. If there is no Section 143(3) order in the file, the defence is largely unavailable, and the case has to be fought on whether the AO genuinely held information suggesting escapement, and on the merits.

Revenue's view vs the taxpayer's view

The revenue’s working position is that reassessment is a legitimate safeguard against under-assessment, and that an AO can validly reopen a case even where the material was technically available in the file, if the original assessment order did not specifically discuss that issue — the argument being that the statutory trigger does not require the earlier AO to have applied his mind to every entry. An audit objection is also frequently cited by the department as the trigger for reopening, even where the objection is really just a difference in legal interpretation of facts already on record, and Explanation 1 to Section 148 now gives the department a textual foothold by treating a Comptroller and Auditor General objection as “information”.

The taxpayer’s counter-position, and the one that has repeatedly succeeded, is that the test is whether the AO applied his mind to the issue in the original assessment — actually, or by the Kelvinator deeming where a Section 143(3) order was passed on material that included it — and whether the reopening rests on fresh tangible material. It is not enough to say the material could have been called for: Explanation 1 to the erstwhile Section 147 expressly provided that mere production of books from which material could with due diligence have been discovered does not amount to disclosure. The objection therefore has to be framed on what was actually examined, not on what was theoretically obtainable. Courts have drawn a clear line between an audit objection that points to a genuinely fresh fact or entry the AO never examined (which can validly trigger reassessment) and one that only disagrees with the AO’s prior legal view of facts already examined (which cannot).

Change of opinion vs a valid reassessment trigger

A worked example

Suppose an assessee claimed a business deduction of Rs 40,00,000 in its return, and during the original Section 143(3) scrutiny the AO specifically raised a written query on this exact claim; the assessee replied with supporting documents, and the AO allowed the claim in the final assessment order without any addition. Two years later a Section 148A(1) show-cause notice is issued, stating that on a review of the file the AO now takes the view that the deduction was wrongly allowed — but the information relied on does not refer to any new fact, any audit para pointing to unexamined material, or any third-party data. It simply revisits the same claim on the same documents already on file.

This is a textbook change-of-opinion case, and on these facts the notice would be vulnerable if challenged. Contrast this with a variant where the Section 148A(1) notice instead cites a fresh AIS entry showing an unrelated Rs 15,00,000 receipt that was never disclosed in the return and never examined in the original assessment — that portion of the reopening stands on an entirely different footing, since it rests on genuinely new information the AO could not have considered earlier.

Note what makes the first example work: a completed Section 143(3) order in which the claim was actually queried and allowed. Take that away — a return only processed under Section 143(1) — and the identical facts give you no change-of-opinion defence at all, only a merits argument on the deduction.

Common mistakes when responding

• Filing a generic reply to the Section 148A(1) show-cause notice without specifically cross-referencing the original assessment record
• Not annexing the original assessment order, the scrutiny notices, and the assessee’s original replies as evidence that the issue was already examined
• Running the change-of-opinion objection without first checking whether a Section 143(3) order was ever passed — on a return only processed under Section 143(1) there is no opinion to change (Rajesh Jhaveri)
• Staking the entire reply on change of opinion. Its survival under the post-2021 “information” regime is not settled, so the merits defence has to be on record as well
• Waiting until the appeal stage, after a full reassessment order is passed, to raise the change-of-opinion objection — when it could have been raised, and could have ended the matter, at the Section 148A(1) reply stage itself
• Assuming every audit objection automatically qualifies as “fresh material” without checking whether it actually points to new facts or is just a differing legal view
• Failing to distinguish a claim that was truly never examined (potentially reopenable, subject to other conditions) from one that was specifically queried and allowed

What should you do

• On receiving a Section 148A(1) show-cause notice, immediately retrieve the original assessment record — the scrutiny notices issued, your replies, and the final assessment order. Establish first whether that order was under Section 143(3) or the return was merely processed under Section 143(1)
• Prepare a point-by-point mapping: for each item of “information” cited by the AO, show whether it was already before the AO (queried and answered, or examined during scrutiny) or is genuinely new
• If no new material is identifiable, raise the change-of-opinion objection explicitly and specifically in the Section 148A(1) reply, supported by that mapping, and ask that proceedings be dropped at that stage
• In the same reply, set out the merits defence on the claim itself. Do not hold it back for appeal — the change-of-opinion point is not certain enough under the new regime to carry the matter alone
• If the AO passes the Section 148A(3) order and issues the Section 148 notice regardless, preserve the objection and argue it in appeal as a jurisdictional issue going to the validity of the reopening, not merely as a point on the merits of the claim
• For any claim that was genuinely never scrutinised earlier, prepare a full merits-based line of defence, since the change-of-opinion argument will not assist an issue that truly was never examined

Frequently asked questions

This article is general information for educational purposes, not an opinion on any specific case or notice. The change-of-opinion bar under the post-2021 reassessment regime is a contested question; verify the current legal position on your facts and consult a qualified professional before acting.